What Dividend Policy Should Southboro Corporation Adopt in the Long-term?

SOUTHBORO CORPORATION
Issue:<Tab/> What dividend policy should Southboro Corporation adopt in the long-term?
Background:
Southboro is a publicly-traded Company with 51% owned by public. It is currently engaged in the sale of CAD/CAM equipment (45% of total revenues), presses and molds (40% of total revenues), miscellaneous machines (15%). The firm has just completed a restructuring of its operations in the face of declining sales and has suspended payment of dividends during the 1st semester of 1988.
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